Twitter’s revenue, revenue reportedly fell 40% shortly after Musk’s purchase

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Twitter’s revenue and adjusted earnings are reported to have fallen about 40 percent year over year in December 2022 amid an advertiser boom following the Elon Musk takeover.

Twitter has not reported earnings publicly since Musk bought the company and took it private in late October. But Twitter reported December 2022 revenue and revenue declines in an update to investors, according to “people familiar with the matter” cited in a Wall Street Journal report on Friday.

Several major companies cut advertising spending on Twitter shortly after Musk’s acquisition, largely over concerns about content moderation. Twitter is offering special deals to advertisers throughout December 2022, but it’s not enough to prevent a 40 percent profit and loss.

Halfway through December, about 70 percent of the top 100 ad spenders on Twitter from before Musk’s purchase were reportedly not advertising on the platform. Some advertisers are back, in part thanks to the deals offered for the Super Bowl in February, so the revenue numbers for the first months of 2023 will be better.

It’s unclear what the exact revenue and earnings numbers are for December 2021 or December 2022 because Twitter reports quarterly earnings when it’s a public company. Revenue in Q4 2021 was $1.57 billion and net income was $182 million. Despite Q4 2021 revenue, Twitter reported a net loss of $221 million for the full year of 2021.

“Twitter posted a net loss in eight of the 10 years from 2012 to 2021 and hasn’t booked an annual profit since 2019,” the WSJ wrote. Twitter’s last public earnings report before Musk bought the company was for Q2 2022. Twitter reported revenue of $1.18 billion and a net loss of $270 million in that quarter.

Musk said he saved Twitter from bankruptcy

A week after his purchase, Musk SAYS that Twitter is losing more than $4 million per day. He cut costs by laying off half of Twitter’s staff, terminating thousands of contractors, and issuing an ultimatum that caused many employees to resign. In early February, Musk said he had a “very tough” three months because he “had to save Twitter from bankruptcy … Twitter still has challenges, but now it’s trending to breakeven if we continue with this.”

Musk used $13 billion in debt to finance his acquisition, resulting in interest payments that reportedly totaled $1.5 billion a year. Twitter reportedly made its first interest payment of nearly $300 million in January. “Some of Twitter’s loans carry an annual interest rate of nearly 15 percent,” the WSJ article said.

Musk seems to have long-term plans to bring payment functionality to Twitter and thus compete against services such as PayPal, but for now it relies on advertising and subscriptions for revenue. His revamped Twitter Blue service didn’t attract many paying subscribers, leaving Twitter far short of Musk’s goal for “about half of our revenue to be subscriptions.”

Another problem is how to keep Twitter running smoothly with a smaller staff thanks to Musk’s cost-cutting. That challenge seemed clear today when an API change apparently broke all Twitter links for 45 minutes or so. Musk WRITES that a “small change in the API will have big consequences,” while claiming that “Twitter’s code stack is too brittle for no good reason” and “needs a complete rewrite .”

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